FTSE 100 edges higher despite UK economy stalling in third quarter

London’s top stock market index was treading water on Monday after revised economic data raised concerns that the UK economy will have flatlined over the entire second half of 2024.

Experts said it painted a “dreary economic picture” as the year draws to a close.

The FTSE 100 was moving higher during the day but pared back some gains in the afternoon. At close, it was up 18.11 points, or 0.22%, at 8,102.72.

Revised figures from the Office for National Statistics on Monday morning showed that gross domestic product (GDP) recorded no growth between July and September, having previously estimated a 0.1% increase.

The new reading was partly explained by fresh survey data showing weaker trading across bars and restaurants.

Laith Khalaf, head of investment analysis at AJ Bell, said: “This is ‘unfestive’ news for the Chancellor and the Prime Minister, who have promised to get the UK growing again.

“Clearly the Government can’t be expected to turn on the taps of the whole economy in its first three months, but the fact GDP has flatlined does outline the scale of the problem.

“Last week the Bank of England said it expected zero growth in the fourth quarter of 2024, again a downgrade from their previous forecast of 0.3%.

“If that proves to be correct, it could mean no growth in the whole second half of this year. That would pretty be close to a technical recession, defined as two quarters of negative economic growth.

“All in all it’s a pretty dreary economic picture as we enter the new year.”

Nevertheless, the FTSE had a stronger session than other top equity markets in Europe. In Paris, the Cac 40 was down 0.03%, and in Frankfurt, the Dax closed 0.18% lower.

Over in New York, the S&P 500 was up about 0.2%, while Dow Jones was down about 0.2%.

The pound was weakening against the US dollar on Monday, and was down about 0.3% at 1.2525. It was also down around 0.1% against the euro, at 1.204.

In company news, Aviva said it had agreed a deal to buy rival insurer Direct Line for £3.7 billion ahead of a Christmas Day deadline for the takeover approach.

Shareholders will get the chance to vote on the deal in March, with the merger set to complete in mid-2025.

Aviva chief executive Amanda Blanc said the deal, which will create a major player in the UK’s motor insurance market, is “excellent news” for both companies’ customers. Shares in Direct Line were 2.8% higher at close.

Elsewhere, fashion retailer Boohoo said it had sold off its London head office for £49.5 million to help pay down its debts.

The proceeds of the deal will be used to pay down the remainder of a loan which had needed repaying by August 2025. Shares in Boohoo were 1.3% higher at close.

The biggest risers on the FTSE 100 were Airtel Africa, up 3.3p to 108.6p, Centrica, up 2.55p to 127.5p, Hikma Pharmaceuticals, up 35p to 1,988p, Pershing Square, up 64p to 3,770p, and AstraZeneca, up 166p to 10,422p.

The biggest fallers on the FTSE 100 were Frasers, down 21p to 605.5p, Spirax, down 195p to 6,755p, Entain, down 17.6p to 690p, Schroders, down 4.6p to 307.6p, and Diploma, down 60p to 4,244p.